Financial Literacy Quiz

Question 1

Is a bull market characterized by rising stock prices?

Accepted Answer

True

Question 2

Banks provide a safe place for storing and growing money.

Accepted Answer

True

Question 3

Who is considered the founding father of the United States financial system?

Accepted Answer

Alexander Hamilton

Question 4

A __________ is borrowed money that must be repaid with interest.

Accepted Answer

Loan

Question 5

A cooperative financial institution for members

Accepted Answer

Credit union

Question 6

Money with value based on the material it's made from

Accepted Answer

Commodity money

Question 7

Who benefits from a loan?

Accepted Answer

Both bank and borrower

Question 8

What financial tool lets you pay later for items bought now?

Accepted Answer

Credit card

Question 9

What is one benefit of saving money?

Accepted Answer

Earn interest

Question 10

A rise in the average price level of goods and services

Accepted Answer

Inflation

Question 11

Interest rates have no effect on borrowing or saving decisions.

Accepted Answer

False

Question 12

What characteristic makes money easy to carry and use?

Accepted Answer

Portability

Question 13

Which of the following is an example of electronic banking?

Accepted Answer

Using an ATM

Question 14

A machine used to withdraw money or check balances is known as an __________.

Accepted Answer

ATM

Question 15

What does the FDIC do?

Accepted Answer

Insures bank deposits

Question 16

Which institution typically offers the lowest interest rates on loans?

Accepted Answer

Credit unions

Question 17

A savings account usually earns more interest than a checking account.

Accepted Answer

True

Question 18

Is a bear market characterized by falling stock prices?

Accepted Answer

True

Question 19

Banks earn most of their income by:

Accepted Answer

Lending money

Question 20

What is the purpose of a checking account?

Accepted Answer

Pay bills and make purchases

Question 21

Which characteristic means money holds its value over time?

Accepted Answer

Store of value

Question 22

A credit union is:

Accepted Answer

A nonprofit cooperative bank

Question 23

What is the main purpose of interest charged on loans?

Accepted Answer

To reward the bank for its risk

Question 24

The higher the credit score, the less trustworthy a borrower appears.

Accepted Answer

False

Question 25

What is required when applying for a loan?

Accepted Answer

Credit history

Question 26

Money that is declared by a government to be legal tender is __________.

Accepted Answer

Fiat money

Question 27

What are the three functions of money?

Accepted Answer

Medium of exchange, store of value, unit of account

Question 28

A __________ allows you to spend money you already have in your account.

Accepted Answer

Debit card

Question 29

Which of the following is NOT a function of a bank?

Accepted Answer

Print money

Question 30

Is diversification important in stock market investments?

Accepted Answer

True

Question 31

__________ is earned by the bank when it loans money.

Accepted Answer

Interest

Question 32

What is the term for a person who buys and sells stocks, bonds, or other securities on behalf of clients?

Accepted Answer

Trader

Question 33

What does APR stand for?

Accepted Answer

Annual Percentage Rate

Question 34

Banks loan out a portion of the money deposited by customers.

Accepted Answer

True

Question 35

What type of money has no intrinsic value but is used because the government says it's valuable?

Accepted Answer

Fiat money

Question 36

A percent of deposits banks must hold and not loan out

Accepted Answer

Reserve requirement

Question 37

Which of the following would increase the money supply?

Accepted Answer

Lowering reserve requirements

Question 38

The Federal Reserve controls U.S. monetary policy.

Accepted Answer

True

Question 39

A __________ is a safe place to store money and earn small amounts of interest.

Accepted Answer

Savings account

Question 40

Which type of money is backed by something tangible like gold or silver?

Accepted Answer

Commodity money

Question 41

The ease with which an asset can be converted into cash is known as:

Accepted Answer

Liquidity

Question 42

Which financial institution did Alexander Hamilton establish in 1791?

Accepted Answer

First National Bank

Question 43

Which of these is a disadvantage of credit cards?

Accepted Answer

Can lead to debt

Question 44

__________ is the general rise in prices over time.

Accepted Answer

Inflation

Question 45

The yearly cost of borrowing money, shown as a percentage

Accepted Answer

APR

Question 46

The __________ insures deposits up to $250,000 per person per bank.

Accepted Answer

FDIC

Question 47

Credit cards immediately remove money from your bank account.

Accepted Answer

False

Question 48

A record of how well a person has repaid credit in the past is called __________.

Accepted Answer

Credit history

Financial Literacy Quiz

Questions 48

Financial Literacy Quiz

Questions 48